Idaho-based Micron Technology is one of the world’s leading RAM chip makers and has benefited from the increase in demand.
Charlie Litchfield/ASSOCIATED PRESS/FR164915AP
hide caption
toggle caption
Charlie Litchfield/ASSOCIATED PRESS/FR164915AP
The world has a memory problem, thanks to artificial intelligence.
The explosion of cloud computing and AI-driven data centers has led to such demand for certain types of memory chips that there is now a shortage. The imbalance is expected to start affecting the prices of all kinds of tech products.
“I keep telling everyone that if you want a device, you buy it now,” said Avril Wu, senior vice president of research at TrendForce, a Taiwan-based consultancy that tracks computer component markets. “I already bought an iPhone 17 myself”
The chips are known as RAM, or random access memory, and are essential to the proper functioning of things like smartphones, computers and gaming consoles. Chips allow you, for example, to keep several tabs open in browsers or to watch videos without them being jerky.
Wu said TrendForce data indicates that demand for RAM chips is outpacing supply by 10% — and it’s growing so fast that manufacturers are having to pay much more to buy them each month.
Wu said that this quarter alone they were paying 50% more than the previous quarter for the most common type of RAM, known as DRAM – dynamic random access memory. And if producers want to receive the chips earlier, they pay two to three times more.
Wu expects DRAM prices to rise another 40% in the next quarter, and she doesn’t expect prices to fall in 2026.
How AI is gobbling up memory
AI data centers require enormous amounts of memory to accompany their cutting-edge graphics processing unit (GPU) microprocessors that train and operate AI models.
“AI workloads are built around memory,” said Sanchit Vir Gogia, CEO of technology consulting firm Greyhound Research.
Additionally, AI companies are spending billions of dollars building data centers at breakneck speed all over the world. This is why Gogia says the demand for these chips is not just a cyclical incident.
“AI has changed the very nature of demand,” he said. “Training and inference systems require large, persistent memory footprints, extreme bandwidth, and close proximity to computation. You can’t reduce that without impacting performance.”
More chips for AI means fewer chips for other products
Idaho-based Micron Technology is one of the world’s leading RAM manufacturers and has benefited from this increase in demand. It reported better-than-expected quarterly profits last week due to rising memory chip prices.
CEO Sanjay Mehrotra said the company expects the market to remain strong as the AI boom continues apace. “We believe that overall industry supply will remain significantly below demand for the foreseeable future,” he said in a webcast after the results were released.
Chipmakers like Micron have staggered production to meet as much of the lucrative demand for high-end AI-related memory as possible, analysts say. That translates to fewer chips for other segments of the market – personal computers, mobile phones, gaming and consumer products like televisions.
And that means higher costs. Jeff Clarke, chief operating officer of Dell Technologies, highlighted the higher costs of a call for results on November 25. For PCs, he said: “I don’t see how it certainly won’t reach the customer base.”
Analysts say there is no short-term solution.
Technical consultant Wu said the memory chip industry is facing a significant bottleneck. By the end of 2026, she said, chipmakers will have reached maximum capacity to expand production at their current facilities.
She said the next new factory expected to come online is being built by Micron in Idaho. The company says it will be operational in 2027.
Expect suppliers to continue raising prices for the foreseeable future, Wu said.